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Unilever, 'a truly multi-local multinational' 1. The Company a. Name: Unilever b. Industry Areas: Unilever produces branded and packaged goods including foods and home and personal care products. c. Market share/importance: Unilever’s mission statement is ‘meeting the everyday needs of people everywhere’, and the multinational definitely has a huge and expanding global reach. Unilever proudly declares that every day 150 million people are choosing their brands ‘to feed their families and clean their homes’. Unilever is one of the world’s top makers of packaged consumer goods and moves countless products like deodorants, fragrances, soap, margarine, tea and frozen foods all over the world. The corporation sells products in over 150 countries and has annual sales of approximately $ 46 billion [£31,5bn]. Unilever controls subsidiaries in at least 90 countries and employs 295,000 (in 2000) people.[1] Unilever is one of the world’s top three food firms -after Nestle and Kraft- and the world’s second largest packaged consumer goods company –behind Procter & Gamble. However, in spite of Unilever’s vast size and presence worldwide, the company’s actual visibility is surprisingly low. Anonymity hides the company’s importance. Unilever does not retail under its own name, preferring brand names to create the illusion of diversity. Who does not know brand names like Magnum, Omo, Dove, Knorr, Ben & Jerry’s, Lipton, Slim-Fast, Iglo, Unox, Becel, and Lever2000? They’re all part of the ‘Unilever armada of brand names’. To make sure the brand names do not go unnoticed, Unilever spends huge amounts of money on marketing and advertising. Advertising has always been a keystone of Unilever’s businesses. The Dutch-Anglo company is likely to be the world’s number one advertiser. (Advertising Age estimate a 1999 global media spend of $3.7bn [£2,539bn], of which $3.1bn [£2,127bn] was outside the US, making Unilever the world's #1 advertiser)[2] d. History: Butter & Soap Unilever was formed in 1930 when the Dutch margarine company Margarine Unie merged with British soapmaker Lever Brothers. Both companies were competing for the same raw materials (e.g. oilseeds), both were involved in large-scale marketing of household products and both used similar distribution channels. Between them, they had operations in over 40 countries. Margarine Unie grew through mergers with others margarine companies in the 1920s. Lever Brothers was founded in 1885 by William Hesketh Lever. Lever established soap factories around the world, and had plantations in many Third World countries. In 1917, Lever began to diversify into foods, acquiring fish, ice cream and canned foods businesses. Control of the supply chain In Unilever one activity has frequently led to another. The oil seeds crushed for use in margarine and soap yielded a by-product known as "cattle cake" which prompted a move into animal feeds. Processing the oil for use in margarine and soap yields other by-products, glycerine and fatty acids, which led Unilever into chemicals, a $2-billion [£1,372bn] business in 1986. [In 1997 Unilever sold its speciality chemicals business to Imperial Chemical Industries (ICI) for US$8bn (£5,489bn)] Those millions of consumer products need to be packaged, which resulted in Unilever operating twenty-four packaging plants in six European countries. Consumer goods must also be transported, which turned Unilever into one of the largest truckers in Britain - and for fifty years, before it was sold in 1985, the Unilever-owned Palm Line was one of the biggest shipping companies out of West Africa. Fishing is another area of interest. Unilever farms for salmon in Scotland, has prawn farms in several Asian countries, and is the major owner of a vertically integrated fishing business out of West Germany that includes catching the fish in deep-sea trawlers, processing the catch, and then selling the fish in company-owned shops and restaurants that carry the Nordsee name. Unilever made a public commitment to move towards buying all its fish from sustainable fisheries by 2005. To meet this objective Unilever and the World Wide Fund for Nature (WWF) jointly set up the Marine Stewardship Council (MSC) as a platform to promote sustainable fishing internationally (1996). The MSC is now said to be an ‘independent, non-profit body with a set of principles and criteria for sustainable fishing’. Recent acquisitions Major acquisitions during the 80s included Brooke Bond in 1984, greatly strengthening the Unilever’s tea interests, while Chesebrough-Pond’s Inc, in 1987, brought a major additional stake in the US personal product market, as well as strengthening Unilever’s position in the world skin care market. [Unilever has been considered a ‘sleeping giant’ for a long time, especially during the 80s. In the 90s Unilever tried to shake this image as a ‘cumbersome, inflexible corporation’ off.] Again, in the 90s, there were numerous acquisitions, and Unilever began to put into effect its planned moves into Eastern Europe. However, the company largely withdrew itself from packaging and all agricultural operations, apart from Plant Breeding International Cambridge [R&D based company developing products (in the agriculture and horticultural sector) mainly under license, sold to Monsanto in 1998] and the plantations. Much of the company’s agribusiness assets were sold as part of the company’s policy to focus on its core activities. Strategy In September 1999 Unilever announced its intention to focus on fewer, stronger brands to promote faster growth. The company is whittling its brands down to 400 (from 1,600) including familiar brands such as Dove, Lux, Lipton, Magnum and Calvin Klein fragrances. (Consulting firm PricewaterhouseCoopers has been hired by Unilever to sell off ten of the firm’s 70 food brands) [3] The concentration on innovation and brand development on a focussed portfolio of 400 leading brands is part of Unilever’s latest growth strategy, called ‘The Path to Growth’, designed to accelerate top line growth and step up the rate of margin improvement in five years time. In February 2000 the company announced a series of linked initiatives (organizational changes, restructuring) to align the entire organization behind these growth ambitions. The shake-up of its top management, splitting the company into two, separate global units –food and home, and personal care-- was one of these initiatives. And Unilever has started selling off any subsidiary businesses which are making less than average profits, and ‘decentralising’ control of subsidiaries, with the corporate HQ in Europe just monitoring profit levels – and making sure they are maximised. This heavy focus on profit means cost-cutting - especially minimising workers’ pay. Another key component of the growth strategy is e-commerce. Unilever wants to step up the use of the Internet in order ‘to improve brand communication/marketing and on-line selling & to simplify business-to-business transactions throughout the supply chain’. India’s Satyam Computer Services Ltd has recently won an information technology services contract from Unilever.[4] Unilever also made deals with Compaq, IBM, Microsoft, Excite@Home, Ariba Inc. (leader in all phases of business-to-business e-commerce) and WOWGO to enable a faster adoption of global e-commerce opportunities. In February 2000, Unilever and iVillage formed a new Internet company. Unilever committed £130 million to e-business initiatives in 2000 and hopes to create a ‘mall that never closes’. In its bid to concentrate on fewer, core brands, Unilever disposed of 27 businesses during 2000 for a consideration of approximately $642 million [£404,7 million]. The company sold, amongst others, the European Bakery Business, Benedicta a culinary business in France and various other small businesses and brands. The same year, Unilever acquired several high-profile companies, including American based Bestfoods, which strengthened Unilever’s market position remarkably. Other important acquisitions were Groupo Cressida Central America Foods (Home & Personal Care) Corporation JABONERIA NA (Ecuador, Foods, Home & Personal Care), Amora Maille (France, Culinary Products) Codepar/SPCD (Tunisia, Home & Personal Care), Ben & Jerry's (USA, Ice Cream), and Slim•Fast (USA, Slimming Products). The total purchase consideration for businesses other than Bestfoods (total number: nineteen) was approximately $4,451 million [£2,8 million].[5] The acquisition of Bestfoods made Unilever's foods business the world's second largest after Nestle. Outlook Views on Unilever’s performance vary. On 28 August 2001, Credit Suisse First Boston (CSFB) downgraded Unilever from a “hold” to a “sell” rating, highlighting analysts’ and investors’ concerns about the performance of Unilever and the integration of Bestfoods.[6] Unilever, on the other hand, is optimistic, saying it saw sales rise 35% by June (2001) and that estimated annual savings of US$32m [£21,9m] will result form the acquisition.[7] Talking to The Guardian (August 4, 2001) Finance director Rudy Markham played down slowdown fears: 'The economic outlook is gloomier than at the start of the year but we are continuing to motor comfortably.' [8] More on Unilever's history: see section four (corporate crimes, paragraphs on Africa and Central and Eastern Europe) of this document e. Products/Projects Unilever is basically an ‘Armada of brand names’. The multinational owns many subsidiaries all over the world (see section two). Unilever’s famous brands include Dove, Knorr, Lipton, Magnum, Omo, Cif, Slim-Fast, Iglo, Birds Eye, Becel, Blue Band, Unox, Calve, Conimex and Lever2000. Unilever categorizes its products as follows: Home and Personal Care (HPC) Products include cosmetics, perfumes, personal wash, soap, toothpaste, deodorants, shampoo, fragrances, detergents for fabric cleaning, diagnostics (e.g. pregnancy tests) Food Products include tea, ice-cream, fish, margarine, frozen foods, spreads & cooking products, salad dressings, culinary products, meat snacks, olive oil, cheese Professional cleaning: DiverseyLever provides cleaning and hygiene products and services to industrial and institutional customers Plantations, Plant Science and Trading Operations: Unilever operates tea plantations and develops raw materials for the vegetable, tomato, edible oil and bakery categories. The company also has oil milling operations. R&D: In 2000, Unilever spent 1,187 million euro [£748,235.37] on R&D, 2,5% of total turnover.[9] A few explanatory remarks on some of Unilever products with a dubious status: Bachelors Beanfeast Unilever was the first multinational company that started using genetically modified (GM) products. Their "Beanfeast" range (which is now being sold) contained GM soya. A tiny asterisk attached to the ingredient list was the only mark to warn consumers. Bachelors Beanfeast contained soya beans which had genetic material from a virus, a bacteria and even the petunia plant inserted into them. Effects on the human body could (and can) not be predicted.[10] Unilever received more than 3,000 phone calls from angry consumers in the UK. By spring 1999, it was forced to withdraw Beanfeast, its flagship GM food product and to agree to phase out all GM products.[11] Omo, Unilever’s international-brand washing powder Omo is a blue detergent powder launched in 1954, and became the Unilever spearhead in the synthetic detergent market. New Blue Star Omo was introduced at the end of March 1963.[12] Today, Unilever is aggressively promoting Omo all over Asia and Africa (see box below for an illustration), packaged in quantities down to 35 gram. Unilever’s brands Persil, Omo and Skip (other Unilever brands include the pre-war brand Sunlight, Sun, Vim and Surf) are engaged in fierce competition with Procter & Gamble's washing powder brands for pole position in just about every world market. P&G was the first to use one brand name for its leading detergent (Tide) in some countries and another brand name, with a different package (Ariel) in the others. Unilever copied this policy. The company markets Surf in many countries and Omo in the remainder. The products are almost identical. But the packages are dissimilar enough that retailers stock Surf in the same section with Omo, often at the same price, so consumers must believe they are different products.[13] 'No customer must ever say I didn't get a packet'‘It is morning in the down-at-heel Tanzanian hamlet of Kiwalani, and salesman Sospeter Jackson is busy helping to define the future of marketing to Africa's dollar-a-day economies. Wearing Unilever's battledress an "Omo" T-shirt and a yellow "Key" baseball cap he has cycled to a tiny outlet beside a gravel road and launched into the daily challenge of bringing his products to some of the poorest people in the world. Salesmen in Unilever uniforms act as mobile advertisements, and by travelling door-to-door develop personal relationships with shopkeepers. They are paid extra if they hit targets. "A systematic distribution operation is crucial to the success of any company in a developing economy. But it is a large-scale undertaking”, says Rajendra Aneja, MD of Unilever Tanzania. Tanzania has 100,000 retail outlets across the country, in 9000 villages. With half the population living below the poverty line, consumers buy rice, maize and flour in tiny quantities every day from mini kiosks in lanes that are too narrow for vehicles. While Unilever delivers goods by van to big shops in towns, it had to find another form of distribution for outlets in inaccessible villages. In December the company came up with a pilot scheme to address this problem: the "bicycle brigade". Salesmen are given bicycles with large boxes welded onto the back to transport small packs of detergent powder, margarine, soap and oil. Each salesman visits about 20 to 30 shops, following a fixed itinerary. Small Omo detergent packs and Blue Band margarine have become market leaders, and Key soap, launched last December, has wrested 15% of a highly competitive market in just eight months.'Source: Financial Times, 7 November 2000 (‘No order too small for bicycle brigade that peddles products in rural Tanzania’) Slim-Fast (see: www.unilever.co.uk/unileverintheuk/slimfast.html) ‘Each Slim.Fast meal contains one third of everything you need to eat in a day - protein, carbohydrate, essential fatty acids, fibre, vitamins and minerals - an ideal food in around only 200 calories.’[14] Slim-Fast was bought by Unilever in 2000, and is now one of Unilever’s top-performers. Unilever CEO FitzGerald [obviously suffering from Nutritional Schizophrenia] likes to say he bought the ice-cream company Ben & Jerry's on the same day he bought Slim-Fast because "one makes you fat, and the other makes you thin."[15] Hunger evidently is a pre-eminent problem in the South, while obesity is a big problem in the North. Hunger and obesity should be considered as two sides of the same medal. Food corporations can now exploit the opportunities (in this case: fighting overweight) opened up by the culture of over-consumption, which they themselves have created. In addition, advertisements & TV commercials add to pressure (particularly on women) to look slim (if not skinny), and enlarge the growth potential for companies such as Slim-Fast. Slim-Fast sells shakes (milk- or soy-based), drink powders, and snack bars through retailers in the US and Europe under the Slim-Fast and Ultra Slim-Fast names. As these names suggest, Slim-Fast capitalises on the needs of weight-conscious consumers. It has marketed products aggressively, hiring celebrity endorsers such as former baseball manager Tommy Lasorda and TV's Kathie Lee Gifford; Lauren Hutton is the company's latest spokesperson.[16] Unilever and Slim-Fast have developed an Internet-based service that offers advice on health management and vitality. You can even join in the Slim-Fast "It Pays to Lose" Instant-Win Game.[17] No purchase necessary to enter or win; just fill in your details [which will be used by the company to sharpen its marketing strategies]. *‘Avoid embarrassing moments’ You can do your online shopping as well. ‘Avoid those embarrassing moments. Purchase products like Slim-Fast online, from the privacy of your home or office. When you shop online for diet aids, you'll never have to face a clerk again!’[18] Visit Slim-Fast online: http://sweepstakes.yahoo.com/slimfast *Light-weight citizens 'Slim.Fast has the longest clinical trials running of any slimming programme - in Pound, Wisconsin the population using Slim.Fast for weight control for the past five years is now an average 11.5kg lighter than the population in a nearby town.' [19] *Safety Alert On 3 August 2000, Slim-Fast (voluntarily) recalled more than two million milk-based shakes, saying they may present a low risk of temporary gastrointestinal sickness and should not be consumed. The shakes were being pulled off supermarket shelves due to a ``manufacturing problem”.[20] Fair & Lovely Unilever’s subsidiary based in India, Hindustan Lever Limited (HLL) markets Fair & Lovely Skin Cream and Lotion, the largest selling Skin Care Product in India; a brand developed in India, and now exported to over 30 countries.[21] Fair & Lovely is being promoted as a ‘fairness face cream’ that will lighten your dark skin. Through their advertisements, Hindustan Lever spreads the message that a light skin is better than a dark skin. This type of advertisement promotes racism. It sends out the message that dark-skinned people are inferior. 2. Who, where, how much? a. Structure/Ownership The company is a joint venture of Unilever NV (The Netherlands) and Unilever PLC (UK), the parent companies. Since 1930, the two companies have operated as one, linked by a series of agreements. They trade separately but have one board of directors. Unilever’s corporate centres are London and Rotterdam. Unilever PLC Unilever NV Unilever House Weena 455 Blackfriars 3013 AL London Rotterdam EC4P 4BQ The Netherlands Postal Address Postal Address P O Box 68 P O Box 760 London 3000 DK EC4P 4BQ Rotterdam Tel: +44 (0) 20 7 822-5252 Tel: +31 (0) 10 217 4000 Fax: +44 (0) 20 7 822-5951 Fax: +31 (0) 10 217 4798 Web site: www.unilever.com Major shareholders (10 Mar 1997) *The Leverhulme Trust and the Leverhulme Trade Charities Trust, jointly (5%) *Prudential Corpn plc (5%) *Holding in Unilever plc; In addition, NV Elma and United Holdings Ltd each hold 50% of the deferred shares of Unilever plc and 50% each of the ‘special shares’ of Unilever NV. NV Elma is a subsidiary of Unilever NV and United Holdings is a subsidiary of Unilever plc.[22] Executive Committee Leading the Committee are the chairmen of Unilever PLC and Unilever NV, the parent companies. Other members are the global division directors for Unilever Bestfoods and Home and Personal Care; the Corporate Development Director; the Finance Director and the Personnel Director. Niall FitzGerald Chairman, Unilever PLC and Vice Chairman, Unilever NV (since 1996) Nationality: Irish Age 56 FitzGerald is also non-executive director of Merck & Co (one of the world’s leading pharmaceutical companies) and Ericsson (one of the world’s biggest suppliers in telecommunications, Ericsson is taking the lead in the expansion of mobile infrastructure, including GSM’s). * Niall FitzGerald, CEO of Unilever, the UK's largest advertiser with an annual spend of nearly a quarter of a billion pounds, accepted the Advertising Association's invitation to become President of the AA as of 22 May 2000. He took over the post from the incumbent, Sir George Bull, Chairman of Sainsbury plc, who has held the office since 1996. The Advertising Association is a federation of 26 trade associations and professional bodies representing advertisers, agencies, the media and support services. It is the only body, which speaks for all sides of an industry currently worth over £17 billion per annum. * Unilever chairman Niall FitzGerald has recently been named as the most powerful marketer in the UK (May 2001). FitzGerald retains the number one spot in ‘Power 100 list’, now in its second year. Power 100 ranks the most influential people in the industry by criteria such as spending power, personality, brand strength and contracts.[23] *According to annual reports and Bloomberg data, salaries for the highest paid executives at Britain’s 30 biggest companies rose 67% over the past year to a medium of £1,2 million. Unilever CEO FitzGerald received a 15% increase in salary and bonus in 2000, while net income of the company fell 60%. FitzGerald’s total ‘compensation’ was £1,5 million. [24] More information about FitzGerald can be found in Magazine Issue 9: Corporate Man / Niall FitzGerald [He has donated to building cooperation and peace in Northern Ireland, and has run the London Marathon for charity... Now he is a corporate executive intent on maximising profits at any cost] [25] Antony Burgmans Chairman, Unilever NV and Vice Chairman, Unilever PLC (since 1999) Nationality: Dutch Age: 54 Member of the board of commissioners of the ABN AMRO Bank NV (which made headlines last year because of their investments in Burma) and member of the international advisory board of Allianz AG (a global insurance company). Burgmans is member of the ERT. He also chaired a CEO Panel at the World Water Forum in March 2000 (the Water Forum has been widely criticised for being an elitist gathering of high-positioned people talking about global water problems, in the absence of many vital stakeholders). Burgmans is said to have a keen interest in Dutch painters of the 16th and 17th centuries and is chairman of the Bredius Museum in The Hague Clive Butler (54) Corporate Development Director (since January 2001) Clive Butler is also non-executive director of Lloyds TBS Group plc. Patrick Cescau (52) Global Division Director: Foods (since January 2001) Keki Dadiseth (55) Global Division Director: Home and Personal Care (since January 2001) The former Hindustan Lever (‘Unilever’s Indian Jewel’) chairman Dadiseth is also non-executive director of The Indian Hotels Company (the largest hotel chain in India). Mr. Dadiseth is (February news, 2000) a member of the National Council and Chairman of the Fast Moving Consumer Goods Committee of the Confederation of Indian Industry (CII), a member of the Executive Committee of the Federation of Indian Chambers of Commerce & Industry (FICCI), and a member of the Managing Committees of the Bombay Chamber of Commerce & Industry (BCCI) and the Associated Chambers of Commerce & Industry of India (ASSOCHAM). He is also a Director of the Indian School of Business (ISB), a management school being set up at Hyderabad in affiliation with the Wharton and Kellogg management schools, USA.[26] André van Heemstra (55) Personnel director (since May 2000) Rudy Markham (54) Financial Director (since August 2000) Regional Presidents The regional presidents are responsible for delivering business results in their respective regions. Regional presidents report to either the director of the Foods division or the director of the Home and Personal Care division. Neil Beckerman Diego Bevilacqua Jeff Fraser Tex Gunning Ralph Kugler Anton Lenstra Harish Manwani Robert Polet John Rice Manfred Stach Charles B. Strauss Çetin Yüceulug Simon Clift Anthony Simon Advisory Directors The advisory directors are the principal external presence in Unilever’s government. The advisory directors comprise a majority of the members of certain key committees of the board. They attend the key quarterly meetings, committee meetings, conferences of the directors and the Executive Committee, as well as meetings with the Chairmen. Charles R Shoemate (61) Director CIGNA Corporation (an insurance company), International Paper Company and Texaco Inc. Shoemate was president, chairman and CEO of Bestfoods at the time of its acquisition by Unilever Lord Simon of Highbury (61) Lord Simon, former Chairman of BP, was appointed Minister for European Trade and Competition by Tony Blair in May 1997. When he was appointed Minister he resigned from directorships at Grand Metropolitan, Deutsche Bank, Rio Tinto Zinc (RTZ) and Allianz AG Holding. He put his shares in all these companies into a 'blind trust', except for BP, selling their shares for £2.25 million. He went to Cambridge University. He left the Cabinet in July 1999, frustrated with the slow pace of Britain's advance towards a single European currency.[27] Lord Brittan was not only an adviser to Tony Blair, he also became an adviser to European Commission President Prodi. Lord Simon was vice president of the European Round Table (ERT), a non-executive director of the Bank of England, Rio Tinto and Grand Metropolitan, and a member of the advisory boards of Deutsche Bank and Allianz. In addition, Lord Simon is a member of the Advisory Board of LEK Consulting (a ‘leading international strategy firm that assists the world's major companies in achieving superior returns for shareholders’), and a member of the European Advisory Board of Morgan Stanley Dean Witter (a ‘global financial services firm and a market leader in securities, asset management and credit services’).